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E-Commerce and Fraud

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Introduction

E-commerce, or electronic commerce, can include any type of transaction which requires electronic transmission of data. Fraud, in this respect, can include the most obvious type being online transactions, as well as a far range of other activities from the swiping of a stolen credit card at a grocery store to the electronic embezzlement of money by an employee within a company. E-commerce fraud is different than that of other specific industries or situations. It encompasses such a large span of industries, activities, and data types; it is a relatively new concern since the internet has become prominent In most households only within the past 15 years resulting in lack of education and security concerns for many users especially since verification of identity is difficult without face to face encounters. As with many types of fraud, E-commerce fraud targets the consumer as its primary victim, leaving many individuals at risk. Fraud may occur within organizations as well as outside organizations; it can be perpetrated by a business, a consumer, or a person posing as someone they are not. Within an organization, management or employees can perpetrate a fraud. Since they are inside of the company, they have the advantage of being inside the company's computer network, meaning they do not have to get through external security to access information. This type of fraud can compromise accounting information, company confidential data, or personal information relating to both customers and employees. Sniffing may be used to view data passing along the network, where an employee can gain access to a wealth of information which they are not authorized to access, and this data can be used for personal advantage. ...read more.

Middle

I expect the same old "not for commercial use," and "copyrighted material" rules, but in many cases, there is a lot more involved. Often reading a user agreement or privacy policy provided on a website will help you to understand what and how information is being collected about you and how it is being used. Reading privacy policies will help determine the costs that may be associated with making a purchase or even creating an account with what may be a business that freely distributes your personal information. Some concerning examples I found, such as at www.priorityco.com, states: "Priority Pharmaceuticals, Inc. is your reputable full service distributor of pharmaceutical products, based out of San Diego, California." I searched unsuccessfully for a privacy policy, but found a clickable link at the bottom of the page, "Site Design by Glimpse Interactive," At their website I found: "We offer Search Engine Optimization, Pay-Per-Click Advertising Campaigns, Technology Coaching, Email Marketing Campaigns, Site Statistics Software, Digital Video Services and Content Management Systems to ensure that our clients are on the leading edge of online marketing." It is unclear as to what information they are collecting or sharing, but the tracking and profile building of information regarding pharmaceuticals should not be in question. I also found multiple agencies that collect information and sell it such as www.bestpricedlists.com: "With over 14 million businesses and 200 million consumers at our fingertips, we have access to anyone and everyone you are looking to target for a fraction of the cost." This concerns me in the respect that personal information belonging to me, my family and friends, neighbors and co-workers is being sold, in bulk, in what seems like a dehumanizing way. ...read more.

Conclusion

The US Code has established laws regulating online conduct such as unsolicited advertisements, child protection, unfair or deceptive methods of competition, and interception of communications; however, there does not appear to be many in depth regulations when it comes to online purchases. Ultimately, using caution in choosing conduct in an online environment and ensuring proper security of personal data eliminate opportunity for fraud. As with fraud within businesses, opportunity is the easiest part of the fraud triangle to eliminate. Pressures and opportunities are impossible to control in a global atmosphere full of strangers. Costs of e-commerce fraud are different depending on the situation. Costs to merchants include tools used to deter fraud, such as the Address Verification Service (AVS) which compares address input with the address listed by the card's issuing bank. Money is still lost due to fraudulent payments, also presenting a cost to the company. Costs to credit card companies who suffer from unauthorized use of credit cards and the Fair Credit Billing Act can be substantial, and may involve the loss of money as well as employee labor used to resolve the situation and lawyer fees when necessary. Losses an individual may suffer can be due to stolen funds in bank accounts or other fees incurred by someone who steals personal information. Thousands of dollars in lawyer fees may be required to rectify identity theft situations as well as the possibility of permanent damage to a person's credit report. Fraudulent phishing scams or other schemes may induce sacrifice of personal information and loss of funds. Consumers may pay for products never received and be forced to eat the costs personally. Ultimately, the FBI recorded $183 million dollar loss to Americans in 2005 alone, with trends that expect to continue to increase. ...read more.

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